Benchmarking roads unit rates - 2020
Regardless what approach you select for valuation: internal, external, or combination of both - benchmarking is always a good tool to see if your council is in “trend”.
As in two previous years, we have performed analysis of General Purpose Financial Statements and Special Schedule 7 for the year ended 30 June 2020 of all 128 general purpose NSW councils. As a result of that research, we prepared a roads benchmarking spreadsheet which can be a useful tool to compare your roads unit rates with other councils. Furthermore, it is a great solution for an annual fair value assessment of the assets.
As it was expected, during the last 5 years most of NSW local authorities performed revaluation of roads in 2020 financial year – 82 councils in total. The rest of the councils valued their roads in years between 2016 and 2019. Summary of valuation during the last 5 years presented below.
Since 2016, about 50% of all councils performed revaluation of roads internally. About 12% did it by using both internal and external expertise. The rest 38% engaged an external valuer.
External valuers and asset management consulting firms (which are usually hired to perform robust analysis of condition) were represented by following companies: APV, AssetVal, JRA, Shepherd Asset Management Solutions, Infrastructure Management Group Pty Ltd, EMC-Works, G7 Asset Management, Infrastructure Management Group, Talis Consulting, Civil Engineering Consultants, Pavement Management Services.
Even with the independent valuation, council should still take control over the revaluation process to ensure deliverables from the valuer meet audit, financial accounting and internal management requirements. Hence, benchmarking tools can be very handy in this process.
By aggregating all unit rates into groups by values ($’000/km), some interesting results can be derived.
Nearly half of councils (63 in total) have sealed roads unit rates in a range of >$400k per km. The rest can be seen in a graph below:
35 councils’ unsealed road rates are within $0k-$50k per one kilometer; 33 councils are in the next group of $50-$100k per one kilometer. The two groups combined comprise half of all councils. Unfortunately, we could not find out details for unsealed roads values of about 40 councils which are in a “N/A” group. More details available in a graph below:
There is some uncertainty about 42 councils who did not disclose value of road earthworks in their financial statements or in Special Schedule 7 (because they were combined with the roads values). However, we know that a big group (24 councils) applied unit rate of less than $50k per km; and 22 councils used a rate in between $50 and $100k per km. See details in the graph below.
In previous two years we shared the results of our review with you for free. The 2019 spreadsheet are still available on our Products page for FREE. For the latest spreadsheet as at 30 June 2020, however, we have introduced a nominal fee ($99 + GST). This was a necessary step we had to perform in order to cover all the time and efforts we have put into this work.
Contact us if you want to get the latest spreadsheet. Vanguard also provides services for fair value assessment, desktop revaluation of roads as well as coordination of external revaluation.
Vanguard Consulting Group